Soilders having to return bonuses

[JerryBaumchen 1,473]

Hi Bolas,

Quote

Why is a federal government branch having bonuses they give out taxed?

I have often wondered about that myself. However, it is SOP.

When I retired there was a standing offer of $25,000 for anyone who left the agency under any conditions. I got about $17,500 after taxes.

Jerry Baumchen

[Rick 67]

normiss

Hey Jerry,

In 1984 when I got out of the Navy, the re-enlistment bonus for my rating was $16,000 - or about $12,500 after taxes.
As I recall, you signed a contract with them about that money and the terms of re-enlisting.

had a buddy that got 16k to reenlist he was an aviation radar tech. Got busted for a dirty piss test 2 months later. Loss of clearance and had to pay back the 16k. Had to sell the new Harley he bought with the $$$.

You can't be drunk all day if you don't start early!

[normiss 906]

Because we tax income in this country and that's what a bonus is.
I still pay taxes on my bonus every year, why are these guys any different?

[Hooknswoop 19]

Because it is the Federal government that is giving the bonus and then taking back a percentage. That is extra steps for the same result of just giving the net bonus instead.

If I owed you $20 and you bought my Velo 84 for $1500. It would make the most sense to just pay me $1480 and call it done. It would be inefficient for you to pay me $1500 and then me send you $20.

Want to buy a Velo 84?

Derek V

[riggerrob 644]

normiss

Because we tax income in this country and that's what a bonus is.
I still pay taxes on my bonus every year, why are these guys any different?

.......................................................................................

If you stop taxing the wages of government employees, then you eliminate two or three levels of bureaucracy, saving (civilian) taxpayers a few million tax dollars per year.

[rehmwa 2]

I'm a vet, and I don't have a general knee jerk response here. The IRS comes after people all the time for tax errors that need to be refunded - etc etc etc - there is lots of analogies. I'm definitely not a fan of just yanking it back without considering the short term impact to those that are living tight to budget already....which is a LOT of enlisted people and many times lower ranked officers too.

but: there's likely a range of situations here

Group A - Likely decent guys that really thought they were getting an offer and a bonus, and they re-upped mainly for this offer and nothing else. They met their side of the contract and we need to be sure they keep their bonus.

Group B - Clearly obvious to them at the time that they didn't qualify and they took the bonus anyway knowing it wasn't right and likely shady. That's pretty much fraud. Why should they keep it?

and then everyone in the spectrum in between.

The problem is I doubt there is a way (that would be net cost effective) to examine each individual case and figure out who fits into what group - let alone those in the grey areas between the obvious ends. So I'd have to default with take the good with the bad and let all of them have a process to let them make claim to keep.

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[SkyDekker 1,465]

riggerrob

***Because we tax income in this country and that's what a bonus is.
I still pay taxes on my bonus every year, why are these guys any different?

.......................................................................................

If you stop taxing the wages of government employees, then you eliminate two or three levels of bureaucracy, saving (civilian) taxpayers a few million tax dollars per year.

How do you figure that? Tax returns would still need to be filed and reviewed etc. Nothing changes.

[normiss 906]

Taking back a contractually agreed bonus and taxing said bonuses are two different issue entirely.
I think they should be allowed to keep the bonus, especially since it's in their contract.
Bonuses are taxed like income is, what's the problem with that?

[Hooknswoop 19]

Quote

Bonuses are taxed like income is, what's the problem with that?

I explained above, the Federal government is giving the bonus and then taking part of it back. It would be more efficient to just give the net bonus.

I would imagine some people focus on (or don't realize it will be taxed) the gross bonus number and not the net. This makes is seem like they will get more money for re-enlistment than they actually will, making the bonus system more effective.

Derek V

[Stumpy 284]

Hooknswoop

I explained above, the Federal government is giving the bonus and then taking part of it back. It would be more efficient to just give the net bonus.

I suspect that assumption may not be correct. For everyone else in the country not paid by the federal government, there is a well understood and well embedded process for taxing bonus'. In order to do it the other way round for this relatively small population i'd imagine you'd need a whole new process and everything that goes with that - thereby increasing cost and complexity. That would be my guess anyway.

Never try to eat more than you can lift

[normiss 906]

Then why even file taxes?


Net is a fact of taxable income, bonuses are no different.

[rehmwa 2]

normiss

Taking back a contractually agreed bonus and taxing said bonuses are two different issue entirely.
I think they should be allowed to keep the bonus, especially since it's in their contract.
Bonuses are taxed like income is, what's the problem with that?

I wasn't replying to you specifically. I agree with you on the tax comment. I'd extend it to all sources of income for all categories of people. Simple and straight tax for everyone and everything - one process, one rate, etc etc etc

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[normiss 906]

As I stated earlier in the thread, it was well known and understood in the early 80's.
My buddies knew which BMW, Audi, and Harley they could afford with the $12k and change from a $16k bonus. Especially if you ordered the Harley through the PX.

[DJL 235]

It's taxed because various things allow for exemptions. I don't know what a soldier's filing would be like considering the different allowances but a soldier with two kids who bought a house and is repaying a student loan would have a much different filing than Joe Single who stays in the BEQs and has zero withholdings.

"I encourage all awesome dangerous behavior." - Jeffro Fincher

[SkyDekker 1,465]

DJL

It's taxed because various things allow for exemptions. I don't know what a soldier's filing would be like considering the different allowances but a soldier with two kids who bought a house and is repaying a student loan would have a much different filing than Joe Single who stays in the BEQs and has zero withholdings.

Correct, I simply don't understand the argument that it would save money.

[airdvr 210]

normiss

Hey Jerry,

In 1984 when I got out of the Navy, the re-enlistment bonus for my rating was $16,000 - or about $12,500 after taxes.
As I recall, you signed a contract with them about that money and the terms of re-enlisting.

My son graduated Nuke School in 2014. The Navy ponied up $91K for him to re-up for another 6. Hate to think anyone would ever want that paid back.

The gov't needs to give the money back to those who've already paid it back. Can't imagine the misery people would have gone through over this.

Please don't dent the planet.

Destinations by Roxanne

[rehmwa 2]

Hooknswoop

Because it is the Federal government that is giving the bonus and then taking back a percentage. That is extra steps for the same result of just giving the net bonus instead.
Derek V

silly - it's not the same result

if you don't tax it, tons of politicians and administrators don't get to take their 'cut'

and taxes go to pay for roads and poor people and rain forests and children and women and soldiers....why do you hate soldiers? you have to take money from soldiers so soldiers can get their money - isn't it obvious?

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[Hooknswoop 19]

[riggerrob 644]

In comparison, when Canadian soldiers returned from Afghanistan, their danger pay, overseas allowance, etc. were tax-free, allowing them to buy nice cars, pay off mortgages, etc.

[riggerrob 644]

Has anyone considered how all this extra paperwork Prolongs Traumatic Stress?
Some of those veterans returned from nasty places with miserable memories. Some are simply trying to forget their miserable memories. Put miserable memories behind them ....... allow them to fade in their rear-view mirrors .. .....
The last thing they want is to be reminded of their miserable military service years after the fact.

[Lawndarter 3]

riggerrob

In comparison, when Canadian soldiers returned from Afghanistan, their danger pay, overseas allowance, etc. were tax-free, allowing them to buy nice cars, pay off mortgages, etc.

Our regular pay was tax free up to the pay of a Chief Warrant Officer at the top IPC - essentially all non-commissioned members got their pay without tax, in addition to all the other allowances which are not normally taxable.

This mess in CA is pretty disgraceful - writing it off is small change for the organization writ large, but for individuals it's potentially a lot of money.

[DanG 1]

US Servicemembers do not pay taxes on pay received while in a combat zone either. They pay taxes on regular pay just like everyone else.

- Dan G

[Bolas 5]

riggerrob

Has anyone considered how all this extra paperwork Prolongs Traumatic Stress?
Some of those veterans returned from nasty places with miserable memories. Some are simply trying to forget their miserable memories. Put miserable memories behind them ....... allow them to fade in their rear-view mirrors .. .....
The last thing they want is to be reminded of their miserable military service years after the fact.

Excellent point.

One additional: As the bonuses were almost taxed if they we're trying to claw back the full bonus amount, the government was making a profit.

Stupidity if left untreated is self-correcting
If ya can't be good, look good, if that fails, make 'em laugh.

[ryoder 1,590]

http://www.latimes.com/nation/la-na-bonus-congress-20161116-story.html

"There are only three things of value: younger women, faster airplanes, and bigger crocodiles" - Arthur Jones.